With increasingly cheaper and more efficient means of communication and transportation, companies are increasingly able to spread their activities across the world in order to increase efficiency, reduce costs and improve quality. This trend of specialisation in global value chains has changed the ways companies’ trade, and thus the trade promotion policy needed. The Trade Association for Manufacturing Companies in Sweden, Teknikföretagen, wanted to assess how current Swedish trade policy affect their member companies, and what changes in policy can be expected to strengthen Swedish companies’ international competitiveness.
We compared Sweden to fifteen competing countries; assessing the wider trade-enabling framework of each country on parameters such as quality of infrastructure, efficiency of customs procedures and attractiveness to FDI. The findings were compiled in four sub-categories measuring different traits of a countries trade enabling circumstances: market access, border administration, logistic environment, and operational environment, which were subsequently compiled into a trade-enabling index. We also surveyed academic literature for quantitative evaluations of which effect directs export support measures can achieve, such as financial support to exporting SMEs and export advisory services.
The key finding of the study is that a good wider trade-enabling framework (domestic infrastructure, tax levels, administration required to export etc.) is at least as important as direct trade supporting instruments (trade finance, economic diplomacy and export advisory services) for a country’s trade performance. Well-designed trade supporting instrument are also important, and serve as complements to the wider trade-enabling framework. To further strengthen their competitiveness areas, as well as improve their week ones, Sweden can improve on several accounts. The main areas in need of improvement in the wider trade-enabling framework are tax levels for companies, domestic infrastructure, attractiveness for foreign direct investments, capital requirement to start a business, and legal possibilities for contract enforcement. For the direct export supporting measures, an increased use of public diplomacy and better coordination of different support schemes for exporting firms is recommended.
The study is commissioned by Teknikföretagen.
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